Sir, You Are Being Subsidised: UK games industry tax breaks are go

The European Commission has greenlit UK games industry tax breaks, following a year-long investigation into whether developers really needed them.

“Our initial doubts have been dispelled,” said the Comission’s VP of competition policy, Joaquin Almunia. “The proposed aid for video games is indeed focusing on a small number of distinctive, culturally British games which have increasing difficulties to find private financing.”

Not all UK-made video games will automatically benefit from the reduced 25% tax rate. Instead, developers will be required to score at least half marks on a cultural test.

To be eligible, a game must be gain 16 points – awarded for use of the English language, a UK setting and characters, and for employing British staff. Games set in or starring characters from other counties in the European Economic Area can also qualify.

Despite the restrictions, UK games industry body TIGA estimate that the policy will result in an extra £188 million investment for local games development in the next half a decade.

The proposed tax relief was first announced in the 2012 Budget by a red briefcase-wielding George Osborne, and was expected to pass into law on April 1 last year. In the spirit of the day, however, the initiative was blocked while the European Commission investigated precisely how dire a state UK game development was in.

After a year of campaigning by TIGA and UKIE, the Commission has now lifted its block.

“This is a huge boost to the UK games and interactive entertainment sector and the start of a great new era of games production in the UK,” said UKIE CEO Jo Twist. “We are delighted the European Commission recognised the clear market failure for the production of games with a British and European flavour, using UK-based creative and highly skilled talent.”

Will a conditional tax break be enough to bring UK developers back from Canada? The developers large and small in my Twitter feed seem to think so. What do you lot reckon?